Just Because You've Reeled In A Few, Doesn't Mean You're A Fisherman

Fishing Is About More Than Reeling In A Hooked Fish

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Investing Is About More Than Higher Returns

              by: Brendan Magee

Just this past week, on a trip to the Jersey Shore, my father-in-law and I tried our hand at some surf fishing. We were trying to recapture the glory of a few summers ago when we had a banner day and caught all kinds of fish off the Stone Harbor Beach. On that day we caught blue fish, king fish, and sand sharks. You name it, we caught it and had a lot of fun. Fast forward two years, we fished for about an hour and spent most of that time untangling snags in our fishing line and trying to uncover fishing lines that would snap with every cast. A banner day had turned into a, "Can't wait to go home" kind of a day.

So what really went wrong? The major problem was my father-in-law and I, because we reeled in a few fish, believed we knew how to fish. The last time around we had a fishing guide with us. He not only knew when and where to go fishing, he also made sure we had the right equipment, understood how to cast the rod, and made sure that when we reeled in a fish we didn't damage the fishing rod. Captain Frank made sure made sure we got out of our own way.

Without Captain Frank, my father-in-law and I had no idea we were buying rods and tackle unsuitable for casting in the ocean. We bought equipment that assured we would do anything but catch fish this time. We had a false, and dangerous to ourselves, sense of confidence in ourselves.

The overconfident fisherman syndrome can also hit investors and financial advisors. They invest money and experience some positive returns over a relatively short period of time. From there, they conclude that they really do have some expertise when it comes to investing. They conclude they have exceptional skill when it comes to investing, not that they just happened to get lucky. Now they start dabbling in more speculative, or sophisticated forms of investing. Whether they made a killing or lost money, that doesn't matter. For sure they have an expertise, otherwise they wouldn't have ever experienced any success from their investments. So keep at it.

The only problem is without real expertise they cannot distinguish between gambling and speculation versus prudent investing. With that, the odds are they will continue to engage in gambling and speculation where there is a mathematical formula that says they will lose. The only problem is, it is not a $30 fishing rod they stand to lose. They stand to lose the money they needed for a secure retirement or their children's educations.

The lesson here is be humble. Don't be too quick to crown your self a champion fisherman or investor. Have some one who you trust to show you your blind spots and make sure you are not getting in your own way.

P.S. If you want to have a great and enjoyable day of fishing , I have Captain Frank's phone number.

Brendan is the founder and president of Inevitable Wealth Coaching. With questions or comments to www.coachgee.com or call 610-446-4322.